Two experts on what the future will bring to the Bitcoin Markets

As Bitcoin prices wildly skyrocketed in 2017, accompanied by high transaction fees and long wait times, Bitcoin has shifted away from any useful consideration as a trade currency to become a store of value and speculative investment. In the new year, the need for more stable digital currencies will become increasingly important for commercial use.

As the cryptocurrency space matures, it will likely come under more pressure from banking institutions seeking the best way to adapt to the emergence of a burgeoning asset class and meeting customer demands to get involved while still mitigating risk. Expect more forms of diversification, hedging, crypto-finance and insurance plays to join the fray.

We believe blockchains will start to realize their full potential for serious enterprise use in 2018, as new architectures come online that are more scalable and robust for high-volume use. We will be looking at a polychain world, with multiple standards and networks both public and private. If the development community can retain the spirit of open source innovation and collaboration that got blockchain this far, expect a quick evolution process. Some of the first industrial strength applications will be delivered atop hybrid public/private blockchains in the next 12 months.

Cryptocurrencies as an asset class have ballooned to almost half a trillion dollars worth of market value this year. Still, cryptocurrency can be difficult for even sophisticated market participants to use. Most investors are timid about taking care of their own private keys for bitcoin or Ethereum. However, with the advent of advanced derivatives products being released the end of 2017, investors can now easily speculate on cryptocurrency prices without the hassle of handling the underlying asset. As investors buy futures contracts, market makers need to “hedge” this exposure by buying bitcoin from the normal spot and OTC markets. As a result, these products can have a very bullish effect on price, while also allowing traders to “short” the price easily.

The announcement of Cboe and CME futures going live in December 2017 has shaken the cryptocurrency markets to the core. These products will allow institutional investors to take long or short positions on Bitcoin’s price. Some observers fear that the ability to short the contracts will lead to a large price correction in Bitcoin markets. However, the effect of regulated, centrally-cleared futures being introduced is much more complex than that. The underlying bitcoin markets are still quite illiquid and the global awareness of crypto assets is only just beginning.